Yet I question this notion, maybe the baby boomer generation will push death rates up, but will it really be a notable rise? In this post I explore the rising deaths of baby boomers and whether this might be as significant for the funeral industry as assumed.
I keep coming across articles about boby boomers (like this one via FuneralOne), and have found many in the funeral industry predict a sharp rise in business as a result of baby boomers. The article by FuneralOne is a good example, starting off discussing the high value of baby boomers and how they will benefit the industry. Stating that the baby boomers are "the wealthiest, most powerful generation there is".
You can skip to the end for my summary, but it will make more sense if you at least skim through the statistics. Statistics are not always the most exciting of things, but I find them oddly fun, so others might to.
Population Changes & Distribution:
The population distribution and changes are important to this discussion about the value of baby boomers. It must be proven that baby boomers compose a notable share of the market, to do this the changes in population need to be explored.
As the Australian Bureau of Statistics explains:
POPULATION AGE AND SEX STRUCTURE
Over the last 50 years, the absolute number of people increased in all age groups. However, the proportion of the population in older age groups has increased while the proportion in younger age groups has declined. Graph 7.6 shows the proportions of the population by age group and sex in 1960 and 2010, illustrating the ageing of Australia's population. Australia's population is ageing because of sustained below replacement level fertility, resulting in proportionally fewer children in the population, and increased life expectancy, resulting in proportionally more older people in the population.
http://www.abs.gov.au/ausstats/abs@.nsf/Lookup/by%20Subject/1301.0~2012~Main%20Features~Population%20size%20and%20growth~47
In the graph and discussion above we see a comparison of the population in 1960 and 2010. Essentially this section is explaining that Australia's population has a higher rate of people over 30 than under as a result of higher life expectancy. As well as birth rates not being high enough to outnumber older Australians.
It goes on to explain that in 1960 only 0.4% of the population was over 85, and 6.5% was over 65. In 2010 about 1.8% were over 85 and 13% were over 65. The median age has also changed (median age is the age at which half the population is older and half is younger). In 2010 the median age was 36.9 compared with 32.1 in 1990. In 2010 there were 3 million Australians over 65 (3.2% of the population).
 |
ERP at start of period
|
Births
|
Deaths
|
Natural increase(b)
|
Net overseas migration
|
ERP at end of period
|
Increase
|
Increase
|
| | | | | | | | |
| Year |
'000
|
'000
|
'000
|
'000
|
'000
|
'000
|
'000
|
%
|
| 2004–05(c) |
20 127.4
|
255.9
|
131.4
|
124.6
|
123.8
|
20 394.8
|
267.4
|
1.33
|
| 2005–06(c) |
20 394.8
|
263.5
|
134.0
|
129.5
|
146.8
|
20 697.9
|
303.1
|
1.49
|
| 2006–07 |
20 697.9
|
277.7
|
136.0
|
141.7
|
232.8
|
21 072.5
|
374.6
|
1.81
|
| 2007–08 |
21 072.5
|
289.5
|
140.7
|
148.8
|
277.3
|
21 498.5
|
426.1
|
2.02
|
| 2008–09 |
21 498.5
|
297.1
|
143.7
|
153.3
|
299.9
|
21 951.7
|
453.2
|
2.11
|
| 2009–10(d) |
21 951.7
|
291.2
|
141.5
|
149.7
|
198.3
|
22 299.8
|
348.0
|
1.59
|
| (a) For further information on the components of population change, please refer to the explanatory notes in Australian Demographic Statistics (3101.0). (b) The excess of births over deaths. | ||||||||
| (c) Differences between total increase and the sum of the components of population change prior to September quarter 2006 are due to intercensal discrepancy. | ||||||||
| (d) Preliminary estimate. | ||||||||
| Source: Australian Demographic Statistics (3101.0). | ||||||||
Source:
http://www.abs.gov.au/ausstats/abs@.nsf/Lookup/by%20Subject/1301.0~2012~Main%20Features~Population%20size%20and%20growth~47
Australia's population is has grown by 1.5% per year, between 2006-2007 there were 274,300 births and 134,800 deaths. The population doubled from 10.3 million in 1960 to 22.3 million in 2010.
Life Expectancy & Death Rates:
Death rates and life expectancy are another important factor in this discussion. After all, this discussion is about the changing death rates of the population.
The life expectancy for those born between 2008-2010 is 84 for women and 79.5 for men. As shown in the graph below. Death rates have been steadily declining in Australia, for men aged 85 and over the death rate dropped from 175.7 to 146.3 deaths per 1,000 in the last couple of decades. While for women aged 85 and over it dropped from 143.5 to 127.1 deaths per 1,000. Overall the standard death rate (SDR) dropped from 6.9 deaths per 1,000 in 1991 to 5.7 deaths per 1,000 in 2010.
Morbidity Statistics via the Australian Bureau of Statistics:
http://www.abs.gov.au/ausstats/abs@.nsf/Lookup/by%20Subject/1301.0~2012~Main%20Features~Mortality,%20life%20expectancy%20and%20causes%20of%20death~231
Summary & Conclusion:
This data indicates that it is not as simple as the boby boomers being dominant. In 2010 about 68% of the population was 15-64 and the median age was only 36.9. While a good portion are towards the higher end of 15-64 the baby boomers are not quite as big (or maybe old) as assumed. Basically the majority of the population was still under 64 in 2010.
Predictions estimate that over the next 40 years the number of Australian's over 65 will double to 25% (source). This is hardly the spike in older people many such as FuneralOne seem to assume. Even if those over 65 double in number they will still only account for 25% of the total population. Yes, this is a big rise compared with previous years were those over 65 made up under 10% of the population. But overall this is not quite as dramatically large a portion as often assumed.
This rise will also occur over 40 years, hardly a sudden jump in older people. The rise will be gradual, not sudden, as it will take the better part of two generations to come into true effect. So not only will the number of elderly not necessarily be as high as thought, it will not necessarily be as sudden a rise either.
Now, if we compare this with death rates this also questions the value of the baby boomers for the funeral industry. Currently the life expectancy is about 84 for women and 79.5 for men. In 2010 68% of the population was under 64. This means it is another 10 to 20 years before the baby boomers start to properly influence death rates if they ever really do.
Essentially the current rise in death rates reflects a general trend in the population, it is not tied to the boby boomers who are not really dying yet. Australia's death rates are on the rise because the population as a whole is also rising. The population doubled between 1960 and 2010 (and grown by about 1.5% per year), it is only expected that death rates should also increase.
Another factor is life expectancy. Life expectancy in Australia is 79 for men and 84 for women, in 2010 only 3.2% of the population was over 65 and the bulk were under 64. So assuming the majority were between 60-64 it is still another 20 years before we can expect a rise in the death rate.
Another thing to keep in mind is that deaths are not clustered around the same age. By this I mean that there is a decent stratification (or spread) of deaths over a number of ages. While life expectancy is 84 for women not all women will die at this age. Some will live past their 90s, others will die before 80. We can draw reliable conclusions about populations, but it must always be kept in mind that things are not so certain.
Personally I believe that those waiting for the baby boomer spike will continue to wait and never notice it, as it will be gradual. The rise in death rates will be slow and take between 20 to 40 years to truly rise all that notably, if it even happens.
Adding to this is that deaths will not really decline after the baby boomers. The population as a whole is growing every year, meaning that there will be more people to die after the baby boomers than before the baby boomers. Perhaps there will be a decline in deaths following the baby boomers, but this should only be a slight decline and rise again soon after.
So in summary, no, I don't think the baby boomers will have as significant impact on the funeral industry as assumed. There will be a rise in deaths, but this is due more to general population trends and not to specific generations (such as baby boomers).
If you disagree or have any comments feel free to leave them below. It would be interesting to hear what others might say about this topic.
Having said this, there is an undeniable trend occurring and the elderly are indeed growing. We see this in the statistics above as well as elsewhere. The growth of the elderly will be felt, as aged care services have more demand. So I do not mean to doubt the rise of the elderly in general or the impact of this rise. I simply disagree that the baby boomers will be as significant for the funeral industry as assumed.
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Population size and growth:
http://www.abs.gov.au/ausstats/abs@.nsf/Lookup/by%20Subject/1301.0~2012~Main%20Features~Population%20size%20and%20growth~47
Population projections:
http://www.abs.gov.au/ausstats/abs@.nsf/mf/3222.0
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